The Tanker Orderbook: Watching The Tide Go Out
Shipbuilding Focus last took a look at the tanker orderbook in late 2015, when it was heading towards its most recent peak, following a year of firm ordering. Since then, the pattern has reversed, and in November last year the orderbook hit 66.1m dwt, its lowest level since 2013. With significant delivery volumes ongoing, and contracting currently remaining limited, the trend appears to be well-established.
A Smaller Swell
Against a backdrop of weakening market conditions, the tanker (10,000+ dwt) orderbook has declined in size by 35% in dwt terms since the start of 2016, to stand at 632 units of 67.2m dwt as of 1st March 2018. This was due to both historically weak ordering in 2016, and firm deliveries, which last year reached their highest level since 2011 in dwt terms. At the start of March, the orderbook was equivalent to 11.3% of the tanker fleet in dwt terms, the lowest level since 2013.
An Ebb Tide
The size of the crude tanker orderbook has declined by 31% in dwt terms from the start of 2016 to stand at 49.4m dwt as of 1st March 2018, with the Suezmax orderbook shrinking fastest by 53%, to reach 8.5m dwt. The VLCC orderbook declined by 24% over the same period to reach 30.5m dwt, despite firmer ordering in 2017. Meanwhile, the product tanker orderbook stood at 14.6m dwt as of 1st March, a sharper 44% drop in dwt terms since the start of 2016. As in the crude sector, the fastest drop was at the larger end, with the LR1 and LR2 orderbooks shrinking 57% and 47% respectively from the start of 2016 to 2.0m and 4.3m dwt as of 1st March. Elsewhere, the chemical tanker orderbook declined by 48% in the same period in dwt terms to 3.2m dwt.
Looking across builder countries, Korean yards’ tanker orderbook declined by 43% in dwt terms from the start of 2016 to stand at 26.7m dwt at the start of March. In the same period, the volume of tanker tonnage on order at Chinese yards fell by 32% to 20.4m dwt, while the orderbook at Japanese yards remained steadier, down by 12% to 14.9m dwt. At the start of March, Korean yards accounted for the largest share of the crude orderbook, 46% in dwt terms. However, Chinese yards accounted for a much larger share (6.3m dwt, 43%) of the product tanker orderbook than yards in Korea (4.0m dwt, 28%), where the volume of tonnage on order fell by 68% from the start of 2016.
Over The Crest
Looking forward, the tanker orderbook looks now to be relatively ‘front-heavy’. In total, 46% of the current orderbook in dwt terms is scheduled for delivery this year, with a further 38% due in 2019. Following a slight flattening out in the decline of the tanker orderbook it seems likely that a sharper downward trend could return if ordering remains limited.
Overall, the tanker orderbook has declined sharply since peaking at the start of 2016. Contracting volumes have remained limited, and in contrast some tanker owners have turned to the demolition markets in 2018 so far. With this in mind, and a relatively ‘front-heavy’ delivery schedule, for now the tanker orderbook tide is still firmly moving one way.